Central and Eastern Europe: Accelerate Green Bond Momentum to Conserve Your Economies
- Anonymous
- 3 days ago
- 4 min read
The 11th CFA CEE Conference in Istanbul brought attention to a crucial regional dilemma: is Central and Eastern Europe (CEE) mobilizing enough sustainable finance to meet its climate goals?
The answer, discussed during the Energy and Sustainable Finance panel, is that progress is happening—but too slowly.
Despite mounting risks and increasing global appetite for green investments, most CEE countries lag behind when it comes to issuing green, social, and sustainability-linked bonds (GSSS+). This blog explores why that gap matters, what the data reveals, and what the region needs to do next.
Why This Matters
High Exposure to Risks: CEE economies are disproportionately exposed to climate and energy security risks but remain underrepresented in the green finance space. As panelists in Istanbul emphasized, this is a missed opportunity—both for long-term economic resilience and access to climate-aligned capital. According to Swiss Re, global climate-related insurance losses could exceed $145 billion in 2025, with a 1-in-10 chance of breaching $300 billion. This figure would surpass the GDP of Slovakia or Bulgaria, underlining how severe climate-linked financial risk is for smaller economies.
Behind Western EU: At the same time, the energy transition is reshaping global investment patterns. The EU is closing in on its 2030 climate goals, and new installations in renewables are accelerating worldwide. China alone installed 60 GW of solar capacity in the first quarter of 2024. But as one panelist observed, CEE’s infrastructure, energy mix, and capital markets are still catching up. Without stronger climate finance channels, especially in bond markets, the region could find itself stuck with stranded assets and rising climate vulnerability.
Uneven Progress in Green Bond Issuance
Green bond issuance in Central and Eastern Europe (CEE) reflects a region moving cautiously into the climate finance space. Poland, Romania, and Hungary have made the most visible progress, launching sovereign green bond frameworks and issuing tranches aligned with international standards like the ICMA Green Bond Principles and the EU Taxonomy. However, this progress is not evenly distributed. Many CEE countries—including Slovakia, Bulgaria, and the Baltic states—have seen little or no recent issuance. The pace and scale of green finance development remain highly variable across the region.
(International Finance Corporation: Emerging Market Green Bonds Report 2021)
Limited Participation from the Private Sector
In the CEE region, most green bond issuance has come from banks and sovereigns, while private corporate participation remains minimal. MDPI research shows that banks in Poland and Hungary are the main financial issuers, with issuance reaching just US$ 5.9  billion and US$ 5.6  billion in Poland and Czechia respectively—Slovakia lagged far behind at US$ 0.36  billion.
Moreover, private-sector issuance is largely confined to utilities and financial firms, with industrials and SMEs rarely participating. This is not just a technical issue: a Financial Times article points to structural barriers like illiquid markets and heavy documentation hindering small- to medium-sized issuers from tapping into bond markets. And as Euromoney pointed out years ago, many non-financial companies remain reluctant due to the complexity and upfront cost of green bond issuance.
Rising Insurance Gaps and Climate Risk Exposure
The global insured losses from natural disasters reached US$ 137  billion in 2024 and could rise to US$ 145  billion in 2025.
57% of total economic losses remain uninsured, leaving a massive US$ 181 billion protection gap worldwide.
In Central and Eastern Europe, this gap is particularly concerning. The European Environment Agency highlights that climate change is already increasing risks to energy, agriculture, health, and infrastructure across the region. Between 2012 and 2022, Europe suffered over € 145 billion in climate-related damages—and future annual losses could surpass €1 trillion by 2100.
Yet, insurance markets remain underdeveloped, and public funding often arrives post-disaster. To close this resilience gap, CEE green bond markets must go beyond emissions and support adaptation—financing early warning systems, urban flood defenses, and resilient infrastructure. Without this shift, climate shocks will continue to outpace the region’s financial preparedness.
Lagging Behind the Global Shift Toward Quality
The green finance market globally is undergoing a shift toward quality, credibility, and verifiability. Investors are favoring bonds that come with second-party opinions, measurable impact data, and alignment with high-integrity labels like the Climate Bonds Standard or the forthcoming EU Green Bond label. Many CEE issuances have not yet integrated these mechanisms consistently.
Early Signs of Momentum
Despite these gaps, there are reasons for optimism. Some CEE countries are exploring sustainability-linked bonds and integrating social and environmental KPIs into sovereign frameworks. Blended finance platforms, backed by the EIB and EBRD, are beginning to offer credit enhancements and concessional co-financing, especially for infrastructure and SME-focused projects. National financial regulators are also stepping up. Preparations for compliance with the EU CSRD are already underway in several countries, and central banks are exploring green supporting factors and stress-testing frameworks.
Action Items
To close this climate finance gap and mobilize capital more effectively, the panelists highlighted several key priorities:
Scale sovereign green bond issuance with transparent frameworks and benchmarks.
Expand corporate participation through technical assistance and ESG reporting incentives.
Align regulatory frameworks with EU taxonomy and CSRD obligations to reduce friction.
Use EIB/EBRD to de-risk local green bonds and attract institutional investors.
Establish a regional platform for CEE pipeline development, ESG data, and standardization.